Thursday, September 28, 2017

Let Me Be Clear: I Have No Inside Information On Who Will Win The Man-Booker Prize Next Month (hedge funds, AI and simultaneous discovery)

Over the years we've mentioned one of the oddest phenomena in science, the simultaneous discovery or invention of something or other, the discovery/invention of the calculus by Newton and Leibniz is one famous example (although both may actually have themselves been preceded) but there are dozens if not hundreds of cases. Here's a related phenomena.

One of the spookiest features of black box artificial intelligence is
that, when it is working correctly, the AI is making connections and
casting probabilities that are difficult-to-impossible for human beings
to intuit.
Try explaining that to your outside investors.

You start to sound, to their ears anyway, like a loony who is saying
"Etaoin shrdlu, give me your money, gizzlefab, blythfornik, trust me."

See also the famous Gary Larson cartoons on how various animals hear and comprehend:...

Today Bloomberg View's Matt Levine commends to our attention a story about one of the world's biggest hedge funds and prize-putter-upper of what's probably the most prestigious honor in literature, short of the Nobel, the Man Booker Award.

...Man Group, which has about $96 billion under management, typically takes
its most promising ideas from testing to trading real money within
weeks. In the fast-moving world of modern finance, an edge today can be
gone tomorrow. The catch here was that, even as the new software
produced encouraging returns in simulations, the engineers couldn’t
explain why the AI was executing the trades it was making. The creation
was such a black box that even its creators didn’t fully understand how
it worked. That gave Ellis pause. He’s not an engineer and wasn’t
intimately involved in the technology’s creation, but he instinctively
knew that one explanation—“I can’t tell you why …”—would never fly with
big clients looking for answers when Man inevitably lost some of their
money...

Now that is just, to reuse the phrase, spooky. Do read both the Bloomberg Markets and the Bloomberg View pieces but I'll note right now it's only with Levine you get:

"I imagine a leather-clad dominatrix standing over the computer, ready to administer punishment as necessary."